Democracy worldwide is under strain. Recent measurements from the V-Dem Project show that about 41% of the global population live in countries moving toward greater authoritarianism, and scholars describe a “third wave of autocratization” that has rolled back democratic gains to levels not seen since the late 1970s. At the same time, economic globalization has continued apace — a development many once expected would encourage political liberalization. That expectation has often failed to materialize.
Conventional wisdom held that reducing the state’s economic grip — through privatization, deregulation and opening to trade and investment — would undermine autocratic power. If citizens became less dependent on the state for jobs, credit and opportunity, they would have more autonomy to organize, resist, and demand political rights. This argument, popularized by economists associated with the Washington Consensus, suggested that market opening would produce political opening.
But empirical patterns tell a more complicated story. In many cases where autocracies liberalized economically, repression did not decline — it intensified. Countries such as Mexico, Malaysia and Senegal experienced spikes in human rights abuses after market reforms, and roughly half of autocracies that opened their economies followed similar paths. Why would a policy designed to weaken authoritarian control sometimes strengthen it instead?
A different explanation focuses on regime insiders: party officials, military officers and other elites who share power with the leader. Economic liberalization reshapes the distribution of wealth and influence, creating new actors — an independent business class, reform-minded technocrats, or outside challengers — who can threaten the established elite’s hold on patronage and influence. For autocratic leaders, loosening the economy is therefore also a political gamble.
When ruling elites are strong relative to the leader, those elites can punish or even remove a leader who undermines their privileges. In that situation, a leader intent on liberalizing risks alienating the coalition that keeps them in power. To preserve elite support during reform, leaders often use repression against outsiders and potential challengers. Repression becomes a tool not just to silence dissent, but to manage elite politics: it reassures insiders that their interests remain protected while allowing the regime to comply with international and market pressures for economic reform.
Put differently, repression can be a compensation mechanism. By cracking down on opposition groups, independent labor organizers, or civil society actors, leaders signal they are safeguarding the status and influence of the old guard. That helps them avoid elite backlash or coup attempts even as they open markets and reduce direct state control over parts of the economy.
This logic helps explain several contemporary cases. Cuba and Venezuela illustrate how the balance of power between leader and elite matters. In Cuba, institutional changes in recent years strengthened the Communist Party and the military’s economic autonomy, extending the bargaining power of insiders. Under those conditions, external pressure to deregulate has coincided with increased crackdowns on dissent — a pattern consistent with the idea that elites demand protection when reforms threaten their interests.
Venezuela’s situation is more fluid but similar dynamics are possible. Recent upheavals, including the removal of Nicolás Maduro in a U.S. operation, could allow regime insiders to carve out greater autonomy. If that happens, further economic opening — especially if driven by external actors — might lead to more repression as leaders work to placate and preserve support from powerful internal actors.
Two further considerations deepen the picture. First, international pressures can interact with domestic elite politics in perverse ways. External actors often condition financial assistance or diplomatic favor on market reforms. Autocratic leaders seeking such benefits may liberalize economically to satisfy external demands while simultaneously tightening political controls at home to keep elites content.
Second, the core dynamic is not limited to classic economic liberalization. Any shift that creates new sources of wealth or influence can alter elite coalitions and provoke similar responses. Emerging sectors — such as artificial intelligence — can produce new elites whose fortunes depend on close ties to the leader. China already offers a preview: under Xi Jinping the state has centralized oversight of strategic tech sectors and promoted firms aligned with the leadership while disciplining independent entrepreneurs. If new technologies generate elites beholden to the center, leaders may gain room to sideline old elites; if, instead, they empower rivals, leaders may respond with repression to reassure insiders.
Research on these processes has yielded surprising results for scholars studying liberalization. A book examining the link between market opening and repression estimates that most dictatorships that adopted liberalizing reforms showed a tendency toward increased repression. The pattern emerged repeatedly across diverse cases, suggesting the mechanism is broad rather than anecdotal.
Another finding is that the threat of international prosecution can intensify this logic. Leaders who fear accountability at institutions like the International Criminal Court may be especially anxious to maintain elite support at all costs, and so more willing to use repression to hold onto power while navigating reform.
The policy implications are sobering. If economic opening frequently alters domestic power structures in ways that prompt leaders to repress in order to appease insiders, then pushing autocracies to liberalize markets from the outside may not improve human rights and could make them worse. Outcomes depend on the specific balance between leaders and elites and on how new economic opportunities get distributed. Understanding those internal dynamics is essential: without it, well-intentioned pressure for reform may simply remake authoritarian regimes rather than weaken them.
